What are the main events for today?

Today is going to be a more lively day as we get a couple of market moving data and we will hear from Fed Chair Powell in the US session. Overall, the data will likely keep things unchanged on the interest rates expectations front but should further reaffirm the disinflationary trend.

09:00 GMT – Eurozone June Flash CPI

The Eurozone CPI Y/Y is expected at 2.5%
vs. 2.6% prior, while the Core CPI Y/Y is seen at 2.8% vs. 2.9% prior. This
report won’t change anything for the ECB as they want to see the data
throughout the summer before deciding on a rate cut in September.

Nonetheless, a faster easing in inflation
during the summer or some quick deterioration in the economy should see the
market pricing in more rate cuts by the end of the year. At the moment, the
market sees 46 bps of easing by the end of the year assigning 61% probability of no
change at the July meeting and 83% chance of a cut in September.

13:30 GMT/09:30 ET – Fed Chair Powell

Fed Chair Powell
will be speaking at the European Central Bank Forum on Central Banking 2024 in
Sintra, Portugal. I don’t expect him to signal anything and just maintain the
usual neutral stance.

In my opinion, a lot will depend on the
next inflation data. I think the Fed will be more dovish if we get a good
inflation report in July. Then, if we get some more good figures in August,
Powell will likely pre-commit to a rate cut in September at the Jackson Hole
Symposium.

14:00 GMT/10:00 ET – US May Job Openings

The US Job Openings are expected to fall
to 7.850M vs. 8.059M prior. The last
report missed expectations by a big margin
with job openings falling to the lowest level since February 2021 and now
getting close to the pre-pandemic level.

This is good news for the Fed as the
labour market continues to rebalance via less jobs availability rather than
more layoffs, and inflationary pressures should keep abating. On the other
hand, the labour market is a spot to keep an eye on carefully in this part of
the cycle.

Central bank speakers:

• 07:30 GMT – ECB’s de Guindos (neutral – voter)
• 08:30 GMT – ECB’s Elderson (hawk – voter)
• 10:30 GMT – ECB’s Schnabel (hawk – voter)
• 13:00 GMT/09:00 ET – ECB’s Lagarde (neutral – voter)

This article was written by Giuseppe Dellamotta at www.forexlive.com.